Gary Growden says he's reinventing himself, but some of his prospects say his deals seem too good to be true.
Ask Gary Growden what he's been up to since his release from federal prison last year, and the affable Apple Valley grandfather launches into a rapid-fire spiel.
To begin with, he says, there are his pending patents. One invention would preserve human organs longer for transplants. Another would keep leftovers from spoiling in the fridge. A third would save truckers fuel and wear and tear on their vehicles. Then there are his plans for a pasta bar franchise, modeled after a favorite Twin Cities restaurant.
Growden, 59, has reinvented himself many times over the years. He's been a singer-songwriter, an Amway salesman, the owner of an equipment-leasing company and a finance broker, which led to his 27-month prison sentence in 2007.
Court records show that Growden pleaded guilty to two counts of wire fraud. One related to an investment scheme he ran between 2002 and 2005 in which he promised to invest money in "midterm notes" issued by Couthars, a Luxembourg-based company he ran. The other had to do with his promise to invest money in a collateralized note.
In both cases, Growden admitted to spending the money for his own purposes.
Though today he would rather talk about his entrepreneurial activities, he acknowledged in a recent interview that he also went back to work in the financial services industry, brokering deals for a variety of projects despite a suggestion from his probation officer to take down his company's web site on Dec. 10 to avoid trouble.
Trouble came to pass last week, when Growden was arrested on suspicion of violating probation. He's scheduled to return to court June 15 on the government's motion to return him to prison.
Growden just can't seem to help himself. "What I don't want to do is go out and tell everybody to stop doing it, to stop turning deals," he said in a May 18 interview.
"Basically, I've become a loan broker," Growden said. "And I know investors. I know equity groups. I know hedge funds. You know, I've been around it for 40 years."
Growden's latest endeavors came to light last month after some commercial loan brokers in Colorado were referred to him as they tried to assemble financing to buy a foliage business in Florida.
The referral came through a daisy chain of other brokers that spans Denver, Salt Lake City and Vancouver, Wash. They say he was pitching a proprietary "Capital Investment Protection Program," or CIPP, which they said sounded too good to be true.
According to Growden's sales documents, CIPP can be used to attract investment capital because it offers "a fully collateralized, 100 percent money back guarantee against loss of principle." But when Win Deal and Mike Casazza of Denver read the paperwork, they said they couldn't understand it.
They grew suspicious of Growden when Internet searches turned up precious little information about a person who claimed extensive experience. After learning about Growden's fraud conviction, they notified a reporter and the U.S. attorney's office in Minneapolis.
"We've had several major scam/Ponzi deals occur here in the last few months, and if we can keep the scammers off the market, so much the better," Deal wrote in a May 12 e-mail to Joe Dixon, the assistant U.S. attorney who prosecuted Growden. Dixon now oversees federal financial crime prosecutions in Minnesota. He declined to comment about Growden.
After Deal's complaint, the FBI began making inquiries about his activities. Growden says that's the last thing he needs.
"I'm not a crook. And I am not a con man," he said.
Never mind that he pleaded guilty in December 2006 to defrauding investors out of more than $390,000, or that he found himself embroiled in two separate Ponzi schemes in Indiana and California -- the latter of which resulted in a $2 million restitution award to Growden that he's unlikely to ever collect. He chalks up his association with the Ponzi schemes to bad luck and misplaced trust, and says he only pleaded guilty in his own criminal case because his lawyer told him that going to trial would risk 18 to 20 years in prison.
"So pleading guilty doesn't mean you did it," Growden said.
Those kinds of arguments fell on deaf ears when he tried in 2006 to get released early from prison. He argued in a handwritten motion that he had "the good faith belief" that his conduct was lawful when he took investors' money.
But court records say he lied to some investors about where the money went and spent some of it on personal items like a fence and storage shed for his home. He wrote the judge that he was "no longer working in that area of finances."
Home to Apple Valley
Growden was released from the federal prison camp in Duluth to a Minneapolis halfway house in March 2009. After a month there, he was put on home detention and returned to the Apple Valley residence where he'd lived before prison.
That struck one victim of his fraud scheme as odd, given that his plea agreement required him to sell the home and turn over the proceeds for restitution.
Growden explained that his house was sold in foreclosure. His company, Couthars Inc., bought the house at the sheriff's sale, he said. Asked if he got a discount, Growden chuckled. "Yeah -- it was cheaper than what we owed on it."
Growden, who arrived at the interview driving a 2002 Lexus, said he still owes substantial restitution. "I think it's down to 237 [thousand], something like that," he said. "I pay $100 a month, which is kind of silly, but it's something, I guess."
On LinkedIn, a professional networking site, Growden lists his title as CEO of The Couthars Companies, which is described as a holding company for Couthars Inc., Couthars Funding Services, CIPP, his inventions and Orvieto pasta bars. His profile page has links to more than 25 venture capital, hedge fund and similar investment groups.
Now serving three years of supervised release, Growden admits he didn't clear his financing activities with his probation officer. But he said he doesn't believe he's violating a court order that bars him from playing a fiduciary role without approval. He says he's only a matchmaker, bringing investors and entrepreneurs together for a fee.
Growden said he hasn't completed any deals yet. And although several are in the works, he said he'd step away if authorities determine he's out of bounds. Despite his Internet posts, he insists that financial services are a small part of his current business activities.
Growden's entrepreneurial claims also raise questions. He says his Nitro-Pac company makes storage containers that can preserve foods longer, and that he's developed a computerized rear-steering truck axle called T2 XL. But a reporter couldn't verify those claims.
Mark Roth, a molecular biologist in Washington whom Growden spoke to about his ideas for preserving human organs longer for transplant patients, said Growden didn't seem to know what he was talking about. "I feel very, very strongly that there is not much value in what he is doing," Roth said.
As for the pasta bars? Growden said he's been an investor in Buon Giorno Italia, a restaurant in Lilydale, Minn., for a long time and that he's helping its owner, Frank Mackondy, set up a franchise called Orvieto.
Mackondy said Growden's stretching the facts. He called Growden a loyal customer and friend who put up $25,000 in earnest money for his business.
"I wanted him to invest. I like him. I thought I could work with him. But it's never gone any further than the earnest money," Mackondy said. He said Growden's idea for a pasta bar franchise "is so far on the back burner that I don't think it is even cooking anymore." He said he's planning to repay Growden's earnest money.
'I've paid my price'
Mackondy said Growden does bring his business prospects to the restaurant, though. "I know that he brought guys here from the AmericInn," he said. "So these guys aren't fictitious dudes."
Growden was upset that a reporter tried to check out his claims. "I'm just trying to rebuild my life and put things back together, and you're destroying my life here," he said in a voice mail message before his arrest. "I'm working and trying to make an honest living. I've paid my price for the mistake I made earlier."
After a preliminary hearing Friday, U.S. Magistrate Judge Jeanne Graham found probable cause that Growden had violated his probation, though she said she was concerned about the strength of the government's allegations of renewed criminal wrongdoing and fraud. "It was going down the road but we're not there yet," she said.
Graham released Growden over government objections on the condition that he have no Internet access, play no role in Couthars and steer clear of any financial services activities. Until the June 15 revocation hearing, she said, "You're just going to keep your blinders on and go home."
Dan Browning • 612-673-4493